Minister won't say whether understanding on size of smelter discount already reached with Rio Tinto

Wednesday, 30 September 2020

Labour leader Jacinda Ardern outlines a plan to extend the Tiwai smelter for another three to five years.

The Government and Rio Tinto are declining to say whether they have already reached an understanding on the size of a discount that the Tiwai Point aluminium smelter would receive from Transpower were Labour to be re-elected.

Labour leader Jacinda Ardern said on Monday that the party would seek to reach a deal with Rio Tinto to keep the smelter open for a further three to five years if it won the election.

Rio Tinto has previously argued its annual bill should be roughly halved from $60 million a year to $28m.

Asked whether the Government and Rio Tinto had settled on the size of the discount, Energy Minister Megan Woods stated in an email that the Government had been discussing options with the Southland community and Rio Tinto about “a managed exit plan”.

* Election 2020: Labour promises to keep Tiwai smelter open longer

Some details of a possible smelter deal with Rio Tinto do not appear to have been nailed down, including the new closure date.

* Energy Minister Megan Woods not denying fresh talks taking place with smelter owner

“Those discussions are ongoing,” she said.

Woods declined to elaborate when asked again whether an understanding on the discount itself had been reached.

A Rio Tinto spokeswoman also declined to say whether a discount had been settled on.

An agreement between the Crown and Rio Tinto on decommissioning the smelter site “does not exist” with Rio Tinto’s obligations instead covered by legislation, Environment Minister David Parker says.

In a possible sign a deal may be in the bag, Rio Tinto would not comment on whether it was preparing to reopen its smallest, fourth potline which it mothballed during coronavirus restrictions in April.

That is a change from its previous position in August when it said it had “no current plans” to restart the potline.

Any deal to delay the smelter’s closure would include commitments to jobs and site remediation, Ardern has said.

Environment Minister David Parker revealed in response to an Official Information Act request that – contrary to common assumptions – there is no bespoke agreement between Rio Tinto and the Crown about how the smelter site should be remediated after it is decommissioned.

Instead, all the smelter’s obligations are set out in national and local environmental legislation, he indicated.

“The operators of the aluminium smelter are required to carry out current and ongoing operations in accordance with all relevant statutory requirements, including the relevant regional and city council plans, workplace health and safety requirements and hazardous substances requirements,” he said.

Parker decline provide copies of any agreements between Rio Tinto and the Crown on decommissioning on the grounds that a document “does not exist”.

In additional to an expected discount from Transpower, Rio Tinto is believed to have been separately offered a reduction from Meridian Energy in the price the smelter pays for power.

It is believed to pay Meridian about 5 cents a kilowatt hour for power from the Manapouri hydro scheme, but had been seeking to reduce that by a third.

Labour has indicated that any drop in the smelter’s bill to Transpower would be accounted for by reducing Transpower’s $165m annual dividend to the Crown, rather than by asking other electricity users to make up the shortfall.